Lagardère Sells EADS Stake for $3 Billion

By REUTERS

April 9, 2013

PARIS — Lagardère, the French media conglomerate, said Tuesday it has sold its 7.4 percent stake in European Aeronautic Defense & Space, beginning the long-anticipated overhaul in the ownership structure of EADS, the parent of Airbus.

Lagardère said it raised €2.3 billion, or $3 billion, through the sale, with EADS spending €500 million to buy 1.6 percent of its own shares — a purchase that fell short of some analysts’ expectations.

Société Générale and Bank of America Merrill Lynch, which managed the sale, said 61.1 million EADS shares were placed at €37.35 each. That was a 3.5 percent discount to Monday’s closing price of €38.71.

“Many investors we spoke to believed EADS would acquire €1 billion to €1.5 billion of the stock being placed by Lagardère,” JPMorgan Cazenove analysts said in a research note.

“It is unclear why EADS is not taking a bigger share of this placing but it is possible that EADS is prioritizing increasing its free float over the accretion of a buyback,” the analysts said.

EADS may also want to “retain buyback firepower’ to support its share price over the next 18 months,” the analysts added.

Lagardère, whose holdings include the book publisher Hachette and magazines like Elle and Paris Match, has said it plans to use the proceeds mostly to pay down debt and return cash to shareholders, likely via a special dividend.

Lagardère’s exit from EADS will be followed by the withdrawal of Daimler, the German automaker, paving the way for the aerospace group to have a larger free-market float with combined government stakes capped at 28 percent.

Since EADS was created in 2000, the French and German governments had an effective veto over the company’s strategic management decisions. Under the new ownership structure, France and Germany will each hold a 12 percent stake and Spain will have 4 percent.